State What, If Anything, Each of the Following Does to the Supply

question 109

Essay

State what, if anything, each of the following does to the supply or demand of loanable funds.
a. Net capital outflow increases at each interest rate.
b. Domestic investment decreases at each interest rate.
c. The government surplus increases.
d. Private saving increases.

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Definitions:

MM Model

The Modigliani and Miller theory, which proposes that under certain conditions, the value of a firm is unaffected by its capital structure.

Corporate Taxes

Taxes imposed on the income or profit of corporations.

Personal Taxes

Personal taxes refer to taxes levied on the income, property, or wealth of individuals, as opposed to taxes imposed on companies or other legal entities.

Capital Structure

The mix of a company's long-term debt, specific short-term debt, common equity and preferred equity, constituting how a firm finances its overall operations and growth.